The Profits of War – Bottled Water Contracts and Bribes

Derrick ShoemakeSun Tzu once wrote that “It is only one who is thoroughly acquainted with the evils of war that can thoroughly understand the profitable way of carrying it on.” Thankfully the Special Inspector General for Iraq Reconstruction (known as SIGIR) is in the middle of a sweeping investigation of the use, and misuse, of money spent on the wars overseas in an attempt to put an end to such personal profits.

SIGIR, created in 2004, oversees Iraq reconstruction programs and operations, and ensures that taxpayer money is spent appropriately. The organization is also prosecuting soldiers and civilians that have pocketed the funds since 2003, including Derrick Shoemake.

Lt. Col. Shoemake entered a guilty plea to charges of bribery stemming from bottled water contracts in Kuwait. Shoemake, a native of Ohio, also ran Entune Entertainment, a hip-hop music label that encouraged soldiers to record songs about their war experiences. The Justice Department uncovered that in the mid-2000s, while Shoemake was in Arifjan, Kuwait, “he conspired first with a Saudi Arabia-based contractor, then with a contractor from India, to fix bottled-water contracts worth millions of dollars. Prosecutors allege Shoemake received $215,000 in cash payments from the Saudi contractor, some of which were delivered by hand to the officer’s wife in Los Angeles.” The Justice Department alleges that another $40,000 was paid to Shoemake from an Indian contractor for bottled water contracts in Afghanistan.

The money from these contracts is no paltry sum. George H. Lee, a contractor charged with bribery, is said to have accumulated almost $20 million in bribes and kickbacks. Lee, however, pleaded not guilty and insists that the accusations against him are a result of a poorly executed Army investigation, racial bias, and a conspiracy.

According to the Wall Street Journal, SIGIR “has funding through December 2012, when files from more than 100 current investigations will be farmed out to agencies, including the Pentagon’s Criminal Investigation Command, the inspectors general for the State Department and the Agency for International Development and the Federal Bureau of Investigation.”¬†Already SIGIR has estimated that it has saved over $1.1 billion through investigations and seized more than $150 million worth of assets. And with only 18 more months of funding, there is plenty more work to be done.